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Euro weakens as markets fade post-September ECB tightening expectations

Scotiabank expects EUR/USD to trade near-term in a 1.1300 to 1.1400 range, with support limited ahead of the low-1.13s.

Reported · Written up by our desk · Major Pairs

Scotiabank strategists Shaun Osborne and Eric Theoret say the euro is under pressure as expectations for further ECB tightening soften, contributing to EUR/USD drifting toward the mid-1.13s, levels last seen in May 2025.

They point to a broader US dollar tone and weakening yield-spread support as markets fade the amount of tightening that had been priced in beyond the next European Central Bank meeting. The note also flags bearish technical conditions, including an RSI firmly in bearish territory, and limited support before the low-1.13s.

Scotiabank adds that a break lower could risk a move back toward May 2025 levels, potentially threatening a retracement of the broader rally from parity. The strategists see a near-term range of 1.1300 to 1.1400 for EUR/USD.

They also note that near-term fundamental risk is limited ahead of Friday’s preliminary CPI release, while ECB messaging remains hawkish and policymakers continue to guide for a September hike.

Latest closeEUR/USD 1.137 ▼0.0%

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